Brait plans R26bn in acquisitions

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Published Nov 28, 2014

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Johannesburg - Brait is seeking investment targets for the 26.4 billion rand windfall it received from the sale of its stake in Pepkor as shareholders pressure the company to spend the cash.

The South African investor plans to make as many as three acquisitions after 12-18 months, chief executive John Gnodde said by phone today.

Brait will look for companies in the food and consumer-goods market at the “value end of the equation,” he said.

Steinhoff International, South Africa’s biggest furniture company, agreed to buy closely held clothing retailer Pepkor for 62.8 billion rand earlier this week to expand in the discount market.

The deal, the largest purchase of a South African company in more than a decade, will create a retailer with more than 6 000 stores across three continents.

Brait, about 35 percent owned by South African billionaire Christo Wiese, will get 15 billion rand in cash from the sale, with the rest in Steinhoff shares.

Smaller shareholders may demand the company spend the proceeds quicker than Gnodde’s timeframe, according to Momentum Asset Management.

“Investors don’t want Brait sitting on a cash pile,” Wayne McCurrie, a money manager at Momentum, said by phone from Johannesburg.

“The pressure will be on to look for something sooner than later.”

Momentum owns almost 44 000 Brait shares valued at about 3.1 million rand, according to data compiled by Bloomberg.

The stock, which fell 19 percent the day the Steinhoff deal was announced, rose 2.7 percent to 72.40 rand as of 3:38 pm in Johannesburg.

Brait is considering acquisitions in South Africa and Europe, Gnodde said.

Following the Pepkor sale, Brait’s three largest investments will include Premier Group, the South African maker of Blue Ribbon bread and Snowflake flour, Iceland Foods, the UK supplier of frozen foods, and Steinhoff. - Bloomberg News

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